Trump plans for Spac deal listing suffer further blow after subpoenas

Donald Trump’s plans to take his media business public have suffered a further blow after a federal grand jury issued subpoenas to a blank-cheque company that is set to merge with Trump Media and Technology Group.

Digital World Acquisition Corp, the special-purpose acquisition company, said in a regulatory filing on Monday that a federal grand jury in New York had issued subpoenas to the company and to each member of its board this month. The subpoenas also demanded a series of documents, including “communications with or about certain individuals”.

A federal grand jury is a group of individuals who decide whether a prosecutor has enough evidence to bring legal action.

The Securities and Exchange Commission is already investigating Digital World, seeking information on whether Trump Media and Technology Group and Digital World had discussed a deal before the Spac went public, which is prohibited.

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Regulators, including US broker-dealer watchdog Finra, are also looking at trading activity in the blank-cheque company before the deal was announced.

The federal grand jury has also requested information regarding Rocket One Capital, a Miami-based investment firm, which according to LinkedIn is led by Michael Shvartsman.

In a separate filing on Monday, Digital World disclosed that Bruce Garelick, a chief strategy officer at Rocket One Capital, resigned from its board of directors on June 22nd but did not state a reason.

Mr Trump’s company, which is led by Devin Nunes, a Republican former chairman of the US house intelligence committee, includes a social network called Truth Social, a podcast unit and a streaming business. It expects to receive more than $1 billion (€943 million) from its merger with Digital World once the deal is completed.

However, the subpoenas threaten to further delay the completion of the transaction, which was announced in October, sending shares in the Spac up from $10 to a peak of $175. They fell 9 per cent to $25.30 on Monday.

Trump Media and Technology Group launched Truth Social in February with a promise to “stand up to ‘cancel culture’ and the ‘self-righteous scolds”. Digital World has warned that the company’s ability to succeed faces risks because of Mr Trump’s history of bankruptcies and failed business ventures.

In a statement on Trump Media and Technology Group’s website, the company acknowledged Monday’s filing and said it was “focused on reclaiming the American people’s right to free expression”.

“Every day, our team works tirelessly to sustain Truth Social’s rapid growth, on-board new users, and add new features. We encourage – and will co-operate with – oversight that supports the SEC’s important mission of protecting retail investors,” it added. – Copyright The Financial Times Limited 2022